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Tybee tax transfers, accounting errors cited

An outside accountant hired to help Tybee Island officials prepare the annual audit report has found a number of accounting deficiencies stemming back to at least 2009.

At the same time, accountant Steven Garber reported the city’s financial condition was “very healthy.”

In the two-page report dated Feb. 27, Garber cited issues relating to the past audit adjustments, faulty record-keeping and transfers from the special purpose local option sales tax fund. The SPLOST fund is supposed to be designated for voter-approved capital projects.

The report states that more than $600,000 was transferred from the SPLOST account into the general fund in 2009 and 2011. In 2010, $145,424 was transferred from the general fund to the SPLOST account.

“Based on the nature of SPLOST funds, I cannot see where it is ever appropriate to have transfers between these funds,” Garber said.

Garber began working with city staff in January after the city got an extension from the Georgia Department of Audits and Accounts to complete last fiscal year’s annual financial report, originally due by the end of 2012.

He recommended the city reinstate the balances to the SPLOST fund before the audited financial statements are submitted.

Garber also reported that more than 40 audit adjustments were made for the 2010, 2011 and 2012 fiscal years — some of which were not posted to the city’s books and resulted in significantly different results than what had been provided to the council prior to the audit. Ideally, there should be no audit adjustments and the council should be able to rely on internal financial statements, he said.

Garber attributed the deficiencies to both past auditors and city staff. He recommended the city seek out additional expertise to assist the finance director in preparing future audits.

“As is often the case in cities the size of Tybee Island, the finance director is often overwhelmed with other responsibilities to have time to fully prepare for the audit,” he said.

Despite the findings, Garber said Tybee is in a “very healthy” financial position. The city’s $4.5 million balance equates to about 46 percent of this year’s budgeted expenditures, while a fund balance of 25 percent is generally considered healthy, he said.

City Manager Diane Schleicher said she was disappointed past auditors and staff didn’t catch the errors but felt confident Garber’s review and Hudson’s arrival would prevent such issues from being repeated.

Hudson began working with the city in October after her predecessor resigned in May, about one month before the current budget had to be adopted.

In February, Hudson got the city council to adopt a national accounting standard established by the Governmental Accounting Standards Board, known as GASB 54, which further clarifies what funds are set aside for a specific use and what funds are free to spend.

Schleicher said she did not think the accounting adjustments necessary to comply with the policy and correct the accounting deficiencies would impact the city’s ability to fund operations.

Councilmen Tom Groover and Barry Brown are not so confident. Both expressed concerns during Thursday night’s council meeting that the pending budget adjustments are going to result in cash-flow problems for the city by limiting the amount of the funds that can be spent.

Garber is scheduled to discuss the findings with the city council during a special called meeting on the afternoon of March 14. Hudson is expected to seek the council’s approval for moving forward with the recommended adjustments during the regular meeting that night.

IF YOU GO

What: Special called Tybee City Council meeting. Accountant Steven Garber is scheduled to discuss his findings after a recent review of Tybee’s finances.